Bitcoin rollout: Exton firm takes another step into world of digital currency

Associated Press
Mike Caldwell, a 35-year-old software engineer, holds a 25-Bitcoin token at his shop in Sandy, Utah. Caldwell mints physical versions of Bitcoins, cranking out homemade tokens with codes protected by tamper-proof holographic seals, a retro-futuristic kind of prepaid cash. WPCS International Inc., an Exton firm that last year diversified into the realm of digital currency with a bitcoin trading platform, recently rolled out a Web-based version of its BTX Trader application.

Associated Press
Ken Lo, CEO of ANXBTC Bitcoin Exchange poses with his Bitcoin ATM during a launch event in Hong Kong. The Bitcoin Exchange on March 13 unveiled the first Hong Kong Bitcoin ATM accessible to the public. Use of Bitcoins has widened greatly in the past year, including their acceptance by online retailers such as overstock.com and tigerdirect.com.

WPCS International Inc., an Exton firm that last year diversified into the realm of digital currency with a bitcoin trading platform, recently rolled out a Web-based version of its BTX Trader application.

The platform, which can be accessed at www.btxtrader.com, was previously available only as a download for Windows-based computers. Essentially, this application helps users analyze data and make trades for the controversial and enigmatic fiat money bitcoin. The newly released online version has the same features and interface as the desktop version.

Users can buy and sell at different exchanges using BTX Trader but all trades and money transfers are handled by the exchanges. The company currently charges no fee for using its application but advises that may change as this venture evolves.

“Launching the Web version of our BTX trading platform is yet another milestone for our company,” WPCS interim CEO Sebastian Giordano wrote in a March 19 news release. “We have refined our technology during the beta downloadable application phase of our launch and are now ready to offer our users a more enhanced trading experience on the Web. We are pleased to now offer the beta via Mac and Linux operating systems.”

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Assisting bitcoin traders is a relatively new venture for the firm. Before last year, WPCS had been exclusively a design-and-build engineering company deploying wireless networks and related services, such as site design, technology integration, electrical contracting, construction and maintenance. Founded in 2002 by Andrew Hidalgo, WPCS lists a diverse customer base of corporations, government entities and education institutions worldwide. WPCS sells its services to the specialty communication systems sector, which includes public services, health care and alternative energy, and the wireless infrastructure sector, which includes work performed for commercial wireless carriers.

So why did the company decide to move into the sphere of virtual currency? To make money, of course, though monetization details are unclear, and company representatives did not return calls seeking comment for this report.

By hitching its wagon to bitcoin, WPCS is assuming many of bitcoin’s associated risks. These include:

• continued worldwide adoption and use of bitcoin;

• bitcoin supply and demand;

• the growth of commercial businesses’ acceptance of bitcoins as payment for goods and services;

• the security of online bitcoin exchanges and digital wallets that hold bitcoins, the perception that the use and holding of bitcoins is safe and secure, and the lack of regulatory restrictions on its use;

• future government regulation or restrictions on the bitcoin network;

• the availability and popularity of other methods of buying and selling goods and services, including new fiat currencies;

• inflation, interest rates and currency exchange rates;

• policies of bitcoin exchanges and liquidity on the exchanges;

• expectations and investments among bitcoin traders.

Far from shying from bitcoin’s list of risk factors, WPCS expects and should profit from bitcoin volatility, according to Christopher F. Davis of the Wall Street Cheat Sheet.

“One thing I will state with 100 percent confidence is that WPCS wants bitcoin to move with extreme volatility. Why? It will increase trading volumes. More trades equals more business and use of the platform. That will be a huge positive for WPCS,” Davis wrote in a Feb. 11 article.

And WPCS faces competition, including the dozens of bitcoin exchanges, where various government-backed currencies such as the U.S. dollar can be converted into bitcoin’s “no bank, no government” digital variety and back again.

By far the largest of those exchanges, Japan-based Mt. Gox (which draws its name from the abbreviation for “Magic the Gathering Online Exchange” because it was originally an online host for trading card enthusiasts) famously went bankrupt in February after a fortune in bitcoins vanished. Last week, some $116 million worth of those virtual coins reportedly were “found” again by investigators.

Mt. Gox’s problems have been a setback for bitcoin, a virtual currency that has grown in popularity since its 2009 creation as a way to make transactions across borders without third parties such as banks.

The restoration of some of the missing virtual currency is potentially good news for bitcoin enthusiasts who invested at Mt. Gox but also raises further questions about the running of the exchange.

Mt. Gox’s statement said the 200,000 bitcoins that the investigators found had been moved to offline wallets. It didn’t specify the type but offline wallets include USB sticks and paper documents.

WPCS says its BTX Trader application has certain advantages lacking at the bitcoin exchanges upon which it relies.

“BTX Trader consolidates order history, executions, market data, positions and charts in a single workspace,” the BTX Trader website says. “Our trade window (montage) enables you to see the entire order book and place trades with just a few clicks. In addition, BTX Trader has order types not available by exchanges, such as a stop limit orders.”

And bitcoin-related ventures such as WPCS’s platform are not all small undertakings with limited potential. Olga Kharif of Bloomberg News writes that Goldman Sachs Group analysts say bitcoin may become an innovative payments technology instead of gaining wider use as an alternative currency, and bitcoin’s underlying technology could enable new methods for payments and e-commerce.

Bitcoin startups in North America such as WPCS’ BTX Trader have received most of bitcoin’s venture-capital investments, drawing $98.6 million to date, according to a report from researcher Aite Group cited by Kharif. Investors have funded 19 bitcoin startups in North America, compared with nine in Asia totaling $13.3 million and three in Europe with $5.6 million, according to the report by Boston-based Aite, which surveyed merchants, banks, regulators and bitcoin companies.

“Progress with the development of our trading platform remains on schedule,” Divya Thakur, BTX chief technology officer, wrote in a news release.

And the company plans to continue to roll out new features and functionality, Thakur said, including more access to market data for major bitcoin exchanges such as Kraken, LocalBTC, Bitfinex, Coindesk, Cryptsy, Bitpay and Bitcoin.de.

For more on WPCS International Inc. (NASDAQ: WPCS), visit www.wpcs.com and www.btxtrader.com.